Introducing e-invoice is the latest trial for mending porous VAT-collection system as the revenue board opts for dumping device-based taxing after prolonged piloting, sources say.
The National Board of Revenue (NBR) has moved to introduce electronic invoicing system to automate VAT collection from businesses at the first go.
Meanwhile, the value-added tax wing of the NBR invited Expression of Interest (EoI) on October 24, 2024 to hire software-development firms on the cusp of the switch.
Dr Abdur Rouf, Member for the VAT implementation and IT wing, bills the invoice-based system as the best alternative to automate the VAT- collection system.
Talking to the FE writer, he has said the NBR has planned to introduce e-invoicing in phases starting with the taxing of large taxpayers that contribute 50 per cent of revenue.
A company would prepare software for the e-invoice system and its integration with the stakeholders.
Only less than 5.0 per cent of this value tax comes from small traders that were target of the device-based collection.
As per EoI, a firm would be selected to design, develop, install, customize, test, commission, implement and maintain web-based software in the e-invoicing system integrated with related stakeholders.
The firm would have to integrate with relevant stakeholders' modules such as registration, raw-material purchase, sales, invoice, input-output co-efficient, return preparation and submission, and payment.
For retail collection, the NBR is still hopeful about outcome of Electronic Fiscal Device (EFD) in VAT collection from retail outlets.
Although the field-level VAT official said such device-based collection system proved ineffective for two decades of trial, the NBR must think about an alternative.
The journey from Electronic Cash Register to Electronic Fiscal Device from 2009 to 2024 proves futile in collecting the tax through electronic system.
Officials have said the VAT authority was compelled to go for device-based automation following pressure from the past government's cabinet.
"It's really difficult for a company to manage huge retail outlets which the field-level officials could not make," says one of them.
Preferring anonymity, a senior NBR official says they have to phase out the device-based VAT-collection system after its trials for two decades proved futile.
Distinguished Fellow of the Centre for Policy Dialogue (CPD) Prof Mustafizur Rahman, however, says such waste of taxpayers' money with whimsical trials is not acceptable.
"Culture for payment of taxes has to be developed in broader aspects rather than targeting only large taxpayers," he suggests.
Accountability is the part of the management and it must be ensured by the latter.
Collection of VAT from retailers is also similarly important to cultivate culture of payment of taxes, he adds.
The NBR, in August 2023, hired the publicly-listed company Genex Infosys to install 60,000 EFDs in Dhaka and Chattogram in the first year and 0.3 million in the subsequent five years.
Only 11,000 devices have so far been installed since 2023.
In 2009, the NBR made installation of ECR mandatory at shops in 11 categories across the country, including hotels, restaurants, sweetmeat shops, department and general stores, jewelry, all shops at shopping malls in metropolitan areas, and medium and large wholesale and retail shops.
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